Copper drops to 3-week lows as inventories rise, focus on oil

Overall industrial metals came under pressure from the firmer U.S. currency, which makes dollar-priced commodities more expensive for holders of other currencies.

Aluminium CMAL3 slipped 0.3% to $3,235, zinc CMZN3 was flat at $3,793.5, lead CMPB3 ceded 0.4% to $1,874, tin CMSN3 was little changed at $51,900 and nickel CMNI3 retreated 0.6% to $16,230.

Copper prices fell on Tuesday to their lowest levels in more than three weeks as inventories at the London Metal Exchange rose, growth concerns from higher oil prices escalated and the dollar climbed.

Benchmark copper CMCU3 on the London Metal Exchange traded 0.5% higher at $14,075 a metric ton in official rings from an earlier $13,926, the lowest since August 20. Traders said bargain hunters had helped copper recover.

Copper stocks in LME registered warehouses have risen nearly 20% since the middle of August to 242,900 tons, due to elevated premiums for nearby contracts against longer-dated forwards 0#MCU:. Traders expect more copper sold at previously high prices to be delivered to LME warehouses over coming days. But with the premiums flipping into discounts last week, deliveries are likely to dry up pretty quickly, they added.

Copper prices across maturities started to fall last week after sources told Reuters U.S. President Donald Trump had not yet made a decision on whether to impose tariffs on copper imports.

The possibility of tariffs on U.S. copper imports pushed Comex copper prices to levels above LME prices. Traders have, for the past 18 months, shipped copper to the United States, taking Comex stocks to record highs.

"Nothing good can come of confusing markets with what is essentially government policy," said Panmure Liberum analyst Tom Price. "My gut feeling is he will impose it at some point otherwise we're going to see the biggest trade reversal in the history of copper."